More Canadian Law Firms Could Scale Down Diversity Efforts, Says GC with DEI Experience
A growing number of Canadian law firms may reduce their diversity, equity, and inclusion (DEI) initiatives, according to Nikki Gershbain, a general counsel with extensive experience in DEI. Gershbain, who previously served as chief inclusion officer at McCarthy Tétrault LLP, warns that the backlash against DEI in the United States could influence Canadian practices, despite the absence of legal mandates to cut such programs in Canada.
The U.S. has seen a significant escalation in opposition to DEI efforts, with several high-profile developments contributing to the shift. These include President Trump’s executive orders ending federal and private sector DEI programs, the U.S. Supreme Court’s decision to strike down affirmative action in college admissions, and major employers canceling DEI initiatives. Additionally, anti-DEI shareholder proposals are rising, and state attorneys general have warned companies about potential repercussions for “unlawfully advancing discriminatory employment quotas.”
In response to these developments, many U.S. companies have identified DEI as a significant financial risk, abandoned diversity targets, and phased out equity and inclusion training. This trend has led to a decline in the use of DEI terminology in public disclosures, signaling a broader retreat from diversity initiatives.
While Canada’s legal and political landscape differs from the U.S., with explicit support for equity programs in the Canadian Charter of Rights and Freedoms and human rights legislation, Gershbain notes that Canadian companies with U.S. operations may face challenges. She warns that maintaining enterprise-wide DEI initiatives could become increasingly difficult due to legal and business risks south of the border.
Gershbain also cautions that scaling back DEI efforts, particularly in hiring and promotion practices, could expose Canadian companies to risks under domestic human rights laws. Such changes could lead to systemic discrimination and increase the likelihood of employment class actions.
Despite these concerns, Gershbain emphasizes that it is still too early to predict exactly how Canadian companies will adjust their DEI policies. The legal foundations for DEI programs in Canada are distinct from those in the U.S., which may shield them from the full impact of the backlash. However, she suggests that the increasing politicization of DEI could lead to changes in how Canadian firms disclose their practices in the near term.
This evolving situation underscores the complex challenges Canadian companies face as they navigate diverging legal and political trends in a cross-border business environment. While Canada’s commitment to equity remains strong, the influence of U.S. developments could reshape the future of DEI initiatives north of the border.
Canadian Firms Face Unique Challenges Amid U.S. Backlash
Nikki Gershbain, a general counsel with DEI experience, highlights that while there is currently no legal requirement in Canada to reduce DEI programs, the political shift and legal challenges to DEI in the U.S. could influence perceptions and practices in Canada. This caution comes as Canadian companies navigate a legal and political landscape that explicitly supports equity programs through the Canadian Charter of Rights and Freedoms and human rights legislation.
The backlash against DEI in the U.S. has intensified recently, with several high-profile developments contributing to the shift. President Trump issued executive orders to end federal and private sector DEI programs, and the U.S. Supreme Court struck down affirmative action in college admissions. Additionally, major U.S. employers have publicly announced the cancellation of DEI programs, and anti-DEI shareholder proposals are on the rise. State attorneys general have also warned companies that they may face reprisals for “unlawfully advancing discriminatory employment quotas.”
In response to these developments, many U.S. companies have identified DEI as a significant risk in financial reports, abandoned diversity targets, canceled equity and inclusion training, and phased out DEI terminology in public disclosures. This trend has led to a decline in the use of DEI terminology in public disclosures, signaling a broader retreat from diversity initiatives.
Gershbain warns that scaling back DEI efforts, particularly in hiring and promotion practices, could create exposure under Canadian human rights laws and increase the risk of employment class actions if changes result in systemic discrimination. She also cautions that scaling back DEI efforts, particularly in hiring and promotion practices, could expose Canadian companies to risks under domestic human rights laws. Such changes could lead to systemic discrimination and increase the likelihood of employment class actions.
While Canada’s legal and political landscape differs from the U.S., with explicit support for equity programs in the Charter and human rights legislation, Gershbain notes that Canadian companies with U.S. operations may face increasing difficulty in maintaining enterprise-wide DEI initiatives due to potential legal and business risks south of the border. She also cautions that scaling back DEI efforts, particularly in hiring and promotion practices, could expose Canadian companies to risks under domestic human rights laws.
Gershbain advises that it is still too early to predict exactly how Canadian companies will adjust their DEI policies and practices, given the very different legal foundations for such programs in Canada compared to the U.S. However, she suggests that increasing politicization of DEI may lead to changes in disclosure practices by Canadian firms in the near term.
The situation highlights the complex challenges facing Canadian companies as they navigate evolving expectations around diversity and inclusion in a cross-border business environment with diverging legal and political trends. While Canada’s commitment to equity remains strong, the influence of U.S. developments could reshape the future of DEI initiatives north of the border.
Conclusion
The potential scaling down of DEI efforts by Canadian law firms, as highlighted by Nikki Gershbain, underscores the complex interplay between legal, political, and cultural factors in both the U.S. and Canada. While Canada’s legal framework explicitly supports equity and inclusion, the influence of U.S. developments cannot be ignored, particularly for firms with cross-border operations. The risks of reducing DEI initiatives, including exposure under human rights laws and increased likelihood of employment class actions, highlight the need for Canadian companies to approach this issue with caution. As the situation evolves, firms must navigate these challenges thoughtfully to maintain their commitment to diversity and inclusion while addressing emerging legal and political pressures.
Frequently Asked Questions
1. Are Canadian law firms legally required to reduce DEI efforts?
No, there is currently no legal mandate in Canada requiring law firms or companies to reduce their DEI initiatives. However, the political and legal trends in the U.S. could influence perceptions and practices in Canada.
2. What risks might Canadian firms face if they scale back DEI efforts?
Scaling back DEI efforts, particularly in hiring and promotion practices, could expose Canadian firms to risks under domestic human rights laws. This could lead to systemic discrimination and increase the likelihood of employment class actions.
3. How might U.S. backlash against DEI impact Canadian companies?
Canadian companies, especially those with U.S. operations, may face challenges in maintaining enterprise-wide DEI initiatives due to legal and business risks in the U.S. This could lead to difficulties in aligning DEI practices across borders.
4. What steps can Canadian firms take to navigate these challenges?
Canadian firms should remain cautious and informed about the evolving legal and political landscape. They should consider the potential risks of scaling back DEI efforts and ensure compliance with Canadian human rights laws while addressing cross-border challenges.
5. What is the future outlook for DEI initiatives in Canada?
The future of DEI in Canada is uncertain but likely to be shaped by the country’s strong legal commitment to equity and inclusion. However, the increasing politicization of DEI and U.S. influences could lead to changes in how Canadian firms disclose and implement their DEI practices.
